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Sales rebound on economic recovery hopes
Buyers appear to be looking past the pandemic to hopes of an economic recovery. Singapore will be entering Phase 3 reopening on 28th December 2020. More businesses and social activities are expected to resume. Vaccine optimism has also bolstered investor confidence. Several vaccines with promising results raised hopes that the global health crisis may soon be under control. Mass vaccination programmes have been gearing up in many countries, including Singapore which has announced plans to roll out inoculation for healthcare workers, front liners and vulnerable patients soon.
According to the Urban Redevelopment Authority (URA) sales survey, new home sales rebounded by 18.9 per cent month-on-month (m-o-m) to 767 units in November. Including Executive Condominiums (EC), new home sales rose 19 per cent. However, sales excluding ECs fell 34.2 per cent when compared to a year ago.
Two city-fringe projects – the 120-unit The Linq@Beauty World and 396-unit The Landmark – were launched last month. 227 new home sales were sold at both projects last month. As such, Rest of Central Region (RCR) accounted for the bulk of 58.3 per cent of the total new home sales (excluding EC). 30.8 per cent of sales were in the Outside of Central Region (OCR) and 11 per cent were in the Core Central Region (CCR). The best-selling projects were The Linq@Beauty World, The Landmark, The Garden Residences and Treasure at Tampines.
November’s healthy sales indicate that not all segments of the market were affected by the new curbs on the re-issuing of option to purchase (OTP). There are many genuine buyers who can afford a private home without applying for an OTP extension. Under the new regulations, developers are no longer allowed to continually re-issue OTPs upon expiry without financial penalties. The clampdown caused a knee-jerk reaction which saw a temporary pull-back in October’s sales. Some affected buyers subsequently made arrangements to dispose of their existing properties to avoid paying the Additional Buyers’ Stamp Duty, so as to proceed with their home purchase.
Well-heeled buyers were largely not affected by the new curbs on re-issue of OTPs as buyers’ appetite for pricier homes remained strong last month. The number of new homes sold above S$2,000 psf rose to a nine-month high, from 53 units in March to 393 units in November this year. 30 new private homes were sold above S$3 million last month, the highest number recorded since January this year. Of this number, nine ultra-luxury homes above S$5 million were transacted, two of which were low-floor units at Boulevard 88 that changed hands for more than S$10 million. The two units were a 258 sqm unit sold for S$10.23 million (S$3,684 psf) and a 256 sqm unit transacted at S$10.15 million (S$3,683 psf).
For the first 11 months of this year, 8,791 new homes (excluding EC) were sold. Since the new project, Clavon by UOL Group, had already sold more than 440 units during its initial launch in December, we estimate that around 650 to 750 total units could be sold in December. This may bring the total tally to be around 9,400 to 9600 units for 2020. Even if adjustments were to be made to take into account any aborted sales, the final sales figure for 2020 will still be slightly below the 9,912 units sold in 2019.
The number of new projects slated to be launched next year is expected to be lower when compared to previous years. We estimate that around 20 new developments could be launched in the first half of next year. Comparatively, the last collective sales cycle notched a blockbuster performance in 2018 and 2019 with around 25 to 35 residential project launches in each of the half-years. Given that fewer new projects would be launched next year, we estimate that the total new home sales may remain at the same level as this year or dip slightly to around 8,500 to 9,500 units (excluding EC) in 2021.